How to Avoid the Silent PPO Pitfall in Medical Coding and Billing

Medical coders and billers can fall victim to unidentified payers, (Silent PPO’s), which get un-contracted discounts at the expense of the provider. Normally when contracting with a network, providers must demand that all plans that access the network are identified up-front and that the provider be notified when new payers are added to the network.

The downfall of some network contracts is that, sometimes, payers can get in the network through the back door. That is, these payers are allowed to access the network contract without being identified initially as a network member. This is known as a silent PPO, and it’s not a good thing for your provider.

Here’s how a silent PPO works: Sometimes a PPO network contract contains language that essentially allows the network to enter into a contract with any individual, organization, firm, or governmental entity on a case-by-case basis, which means that any payer who is willing to pay the commission can access the PPO contract — and its negotiated discount pricing— unknown to the provider. See the problem?

With a silent PPO, a payer can apply a discount rate for services from a healthcare provider without actually having a contract with the provider. This scenario is unfair to providers who sign a contract with the network and its members, which, at the time of signing, did not include the silent PPO. As a result, when the silent PPO pays the discounted rate, it cheats the provider out of a fair payment.

Here are some ways to identify and avoid falling victim to a silent PPO:

Pay attention to the explanation of benefits (EOB). You can spot when a payer accesses a silent PPO if you look at the EOB. If it reflects a PPO discount for a patient who is actually out-of-network, a silent PPO alarm should sound for you.

Avoid networks that allow reimbursement that is much higher than what other commercial insurance companies allow. Payers are in business to make money. If a payer is willing to pay more than the going rate, you can bet that it’s getting money on the other side — from the organization that is actually responsible for the payment.

For example, if a billed service of $1,500 is normally paid $500 but a certain network is willing to pay $750, then that other $250 is coming from somewhere. Chances are, it’s coming from the non-network payer who is willing to pay $1,000 to the network rather than $1,500 to the service provider.

Verify network benefits as part of your provider’s normal pre-encounter work. Either you (or the front office staff) should check the network affiliations on each patient’s card.

If you or your provider learns that a network PPO is allowing access to out-of-network payers, then the provider should notify the PPO network that the contract has been violated and terminate the agreement. The provider may also dispute any silent PPO payments in writing with demand for payment in full for services provided.

Being vigilant is the hallmark of a good coder, and that’s even more true when you find yourself working with commercial insurance payer networks, whether you patients are in- or out-of-network. Think of yourself as the sheriff of Payertown and keep a watchful eye on shady networks and payers.